If you say you saw something when you weren't there, can you be found out?The place I work has key fobs on all doors for fire safety (and keeping tabs on smoke breaks) so it is known where we are at all times.Maybe a gentle let down for your friend?

Someone did this to me once (although in a different context, not insurance). I just said 'sorry, I wasn't there and didn't see it happen, I only know what X told me'. It all went away and the person hasn't ever mentioned it to me again.

Could you say that you already have a serious conviction and are not allowed to be a witness in any court in the UK. Then every time you see him just open your eyes really wide at him, and stare.If he attempts any conversations, just say "I've done my time, I've paid the price" or other random quote loudly and hopefully he will just back away from you.